Walmart is stepping up its challenge to drug chains with the rollout of a new small-format store as part of an urban strategy.

Walmart, small-format store, urban strategy, Bill Simon, discount store chain, Neighborhood Markets, Supercenters, Geoff Walden, Walmart U.S., urban markets, small format, smaller formats, grocery, urban shoppers, Walmart International, Walmart Americas

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Inside This Issue - News

Walmart gets ready to go small

October 25th, 2010

NEW YORK – Walmart is stepping up its challenge to drug chains with the rollout of a new small-format store as part of an urban strategy.

The discount store chain will target cities and small towns with the new outlets, which will be less than 30,000 square feet. It will also continue to open Neighborhood Markets of 30,000 to 60,000 square feet, as well as scaled-back Supercenters.

All told, Walmart will open up to 205 new or converted outlets in 2011, including 30 to 40 small stores and Neighborhood Markets. It has not revealed details of the small format nor exactly how many of the units it will debut next year, or where.

The focus on urban markets comes with Walmart having posted decreasing same-store sales for five straight quarters and lost core customers to dollar stores. And rival Target Corp. is also piloting smaller stores to reach city dwellers.

Commercial real estate brokers have reportedly said Walmart has begun scouting sites from 20,000 to 50,000 square feet in Chicago; Los Angeles; Detroit; Sacramento, Calif.; San Francisco; and Reno, Nev.

Walmart U.S. president and chief executive officer Bill Simon said at a retail conference in New York that, after years of rejection, the company had won approvals for new stores in Chicago and plans a dozen more in the Windy City over the next five years. The city’s sudden embrace, he said, was the result of a new approach that involved working closely with Mayor Richard Daley’s administration.

“Years and years of City Council votes of 64 to nothing against us, and we’ve had three approvals in the last six weeks from the City Council. And we are very, very optimistic about Chicago, and particularly about our opportunities in urban markets,” he remarked.

“We will have to be a little creative with formats, more so than we’ve been in the past. There are not a lot of big, empty lots that we can build 200,000-square-foot Supercenters on, nor do we want to anymore. So we will have a mix, a healthy mix, of Supercenters and small formats, including our grocery format, neighborhood market and smaller formats.”

Simon said Walmart International, especially the Walmart Americas division, has abundant experience in developing and operating profitable small formats, some based on the bodega concept aimed at low-income urban shoppers.